Setup & Logistics for Trading
You’ll just need two powerful, free digital platforms to setup and execute your trades
1) Robinhood (or your choice of broker)
2) TradingView.com
Common brokers include: TD Ameritrade, E*TRADE, Fidelity, Charles Schwab, Interactive Brokers, Robinhood, Merrill Edge, Vanguard, and TradeStation.
First we'll discuss brokers. A broker is a business that connects investors/traders with securities exchanges such as the New York Stock Exchange and NASDAQ.
With very few exceptions, your broker will not make or break your consistent, profitable trading system. You can execute this trading strategy with any broker that you want. You’ll experience very little friction due to your broker’s technology and probably not incur any fees at all.
The Brokerage Business Model
It's important to note how brokers make money. Their primary source of revenue is achieved by selling high and buying low on every transaction. When you place trades you'll see bid/ask prices offered by your broker. This causes buyers and sellers to transact at different prices and the broker (middleman) profits from these differences. High volume of transactions causes these seemingly small differences in price to add up. In this manner, brokers do not directly profit from changes in share price but from the number of transactions known as trade volume.
Choosing a Broker
If you already have a favorite broker, great. If not, I suggest Robinhood as a trading platform for anyone that values simplicity and design.
People who don’t like Robinhood haven’t made money with Robinhood. It is a real broker. It is (almost lol) as reliable as the other brokers. It’s as secure as the other brokers. Once again, your broker will not make you (un)successful.
The strategies presented here do not require advanced features or trading at market open when servers have been known to go down.
Never use market orders and you're never at the mercy of your broker to fill your market orders at a “good price”. You’ll learn to exclusively use Limit Orders; these are discussed later in this course. You control the exact price at which you buy and sell regardless of the broker you choose.
Charts & Data
TradingView.com is a functional, powerful platform for visualizing data that affects your trading decisions. We’ll go over technical analysis, how to set up your chart, and how to interpret what you see on your TradingView.com charts. You’ll be fine with the free version of TradingView.
TradingView also offers community sharing of trade ideas and analysis. Do yourself a favor and ignore the community’s stock analysis. Because there are so many different strategies to trading, their analysis does not contribute to your success in executing your personal strategy. Due to the nature of markets, most traders guess wrong anyway!
Market Hours
Regular market hours are 9:30am until 4pm Eastern Standard Time. You can trade both stock and options.
Extended market hours are 4am until 8pm EST. Share prices will move during these hours. Our strategies do not use these hours to trade.
Robinhood Extended Trading hours are 9am until 6pm EST. Using Robinhood you can buy or sell shares but not options during these times.
Only the market value of your stock position will update during extended trading hours (4am-6pm EST).
Your option contract equity will not update during extended hours. Therefore if you are holding options, your account value will not be accurate until the market opens (9:30am-4pm EST Monday-Friday excluding Holidays)
While the market is open (9:30am-4pm EST Monday-Friday excluding Holidays), your account balance will be accurate because both the market value of your position and the equity in your option contracts will be constantly updated and added together.
With standard internet access & while the market is open, your positions will be updated and accurate every second.
Your Trading Routine
Learning to trade takes time and mental resources. You’re putting in the hard work now.
Trading - as you will learn - takes very little time. When you are comfortable with executing your strategy, you’ll just need between 5 and 30 minutes per week to trade this strategy properly.
Focusing on one stock at a time, as I do, means that analysis just takes about 30 minutes at any time during the week. This is the time that you’ll identify technicals, read news, and form opinions on share price. Record your thoughts and price levels that you identify so that you can use this research when you execute trades on Friday between 3:30 and 3:50 PM.
The time to properly execute this strategy is on Friday between 3:30 and 3:50 PM. That’s it.
The ROI for your time can be unbelievable. I’ve averaged $2500+ per week in account value for the last year. As you personally experience this, you will come to believe it.
Productive vs. Addictive Stimulation from Stock Markets
Human nature tells you to check your account value constantly. It also tells you that your strategy is broken and you need to buy or sell right now. Becoming a consistently profitable trader will require you to ignore these impulses and only execute trades inline with your strategy.
If you don’t want to take the lesson the easy way from me… the market will humble you & your account value will reflect this.
In case you absolutely can not resist the impulse to trade often then there’s one trick that could keep your account from being subjected to a roller coaster. Partition 70% of funds to strategy and 10% fun/active/impulsive trading. The chemical/neurological stimulation is similar regardless of monetary value. It’s the winning and losing that gets people hooked/addicted to this type of stimulation.
Don’t gamble in the casino. Be the casino. You have a lifetime of building wealth ahead of you IF you do this right.
Investing vs. Trading
"Buy shares in Apple and hold them for 10 years" … You’ve heard of this approach to investing.
Investing is a pillar to a balanced portfolio. Buy good companies and hold. Picking the right stock means that you profit over time.
The first drawback to this approach is that this money is unlikely to change your circumstances in the near/mid term future. Another downside is that you’ll have the same number of shares when you decide to sell.
So if you want to take some cash out after holding for 10 years then you will have fewer shares than you started with. You kill the cow instead of milking the cow. (this is further discussed in the section on Account Value vs Position)
Dividend yielding stocks are a traditional method to produce income from ownership of shares.. Annual dividend distributions average less than 5% annually. To generate $60,000 it would take a $2 million dollar account to cover your living expenses.
Investing in index funds has long been a trusted investment tool. Warren Buffett famously beat a hedge fund’s return by simply tracking the S&P 500 using an S&P 500 Index fund (lookup ticker:VOO)
Interestingly, a contributing factor to companies like Tesla and Apple rising so quickly is the unbundling of index funds. Investors have realized that out of the hundreds of companies in index funds, just a few are responsible for the significant increases in share price. So investors have been leaving index funds for shares in individual companies. Still, index funds offer relative stability which is very useful as your portfolio matures.
Trading is the exchange of assets for an intended profit. Trading can look like Wolf of Wall Street or it can look like 5 minutes per week of tapping on your iPhone - that’s what I’ll teach you to do.
You’ll see that trading meets you where you are financially. Learning the skills to trade is more important than making money initially. Become a profitable trader and make money for a lifetime. An inconsistent trader will eventually lose and give up their chance at a lifetime of financial growth.
Also noteworthy is the scalability of both trading and investing. Making 10% on $5,000,000 is the same basic level of difficulty as making 10% on $5000.